Images via Weibo
Hundreds of angry homeowners gathered last weekend to protest what could become a growing trend of price slashing in housing markets around China. Developers of a Pudong apartment complex started offering discounts of up to 30%, enraging buyers who had already invested in the development, as they essentially watched a chunk of their money evaporate. Hundreds gathered in the face of riot police to trample the developers’ offices and show their general discontent.
The protest blew up on Weibo and was forwarded over 50,000 times, but that doesn’t exactly mean observers are sympathetic. As plenty of commenters pointed out, investment in property is a risk like any other, and many of these buyers are likely property speculators who’ve been riding China’s housing bubble as if it would never burst.
But burst it might, and burst it will if the government has anything to say about it. Beijing has been trying to cool housing prices in the face of growing discontent over un-affordable prices driven up by rampant speculation. And according to numbers this month, their tightening measures may finally be having an effect:
In Shanghai, a total of 204,000 square meters of new homes, excluding affordable housing, were sold during the first 16 days of this month, the lowest for the same period in six years and a drop of nearly 73 percent from same period of last year, according to Shanghai Uwin Real Estate Information Services Co.
Recent interest rate hikes by some commercial banks on mortgages for first homes will further dampen sentiment among home buyers and therefore raise pressure on developers for larger price cuts, analysts said.
Other cities might also begin taking their cue from Shanghai, as it becomes clear that Beijing is unlikely to loosen its grip. Housing price averages dipped 10-20% last week in Hangzhou and Tianjin.
But as the protests in Pudong demonstrate, the government may find themselves facing a much louder-than-anticipated backlash from the other end of the market: those who can and have afforded to purchase property at such astronomical prices. If Beijing isn’t careful, there won’t be a housing complex model left un-smashed in Chinese real estate offices.